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There is an interesting idea when index funds are taken to an extreme in that if no one is manually playing the market or managing investments then everything i

There is an interesting idea when index funds are taken to an extreme in that if no one is manually playing the market or managing investments then everything is invested in at the same or similar rates. Index funds need active traders to trade and set pricing within the market. My analogy would be if we are all buying tickets to the big game and sit in the stands until it's over, there's no one to yell and shout and drive the energy of the crown or possibly no one to even compete on the field therefore why are we even showing up? It's definitely the extreme - active trading isn't going away any time soon but fears of a only a limited group playing the market and managing or controlling stock prices for their gain isn't 100% unrealistic.

pas 7y ago
But the wisdom of the crowd, the price signal, only works if professionals look at the stocks. And it requires only a few [hundred] of them (with big enough leverage, so their position shows up). For the top 500 stocks there are enough people (and algos) going over every bit released by the corresponding companies.
- repolfx 7y ago
  That's a contradiction. It's not the wisdom of the crowds if only a few hundred people are really looking at things. The whole point of that expression is that you need a crowd, to avoid groupthink, capture etc
  - pas 7y ago
    Not really, because passive funds just piggy-back on the price finding results of the market. And the active market is very sensitive. Especially if someone is so confident that they are willing to use drastically leveraged positions.